The Challenge of Innovating in an Operationally Efficient Ecosystem

The move to eliminate excess capacity and externalize non-core competencies has driven leading life science companies towards process-centric approaches that have the strong potential to stifle creativity and encourage incrementalism. With most organizational initiatives requiring near term ROI to justify investment, there is little room for paradigm changing innovations. With the exception of sheer luck allowing organizations to capture new drug or market opportunities through M&A, there remains a need to encourage innovation even in operationally efficient organizations.

I believe that the simple opportunities that organizations are using to innovate do not address the core industry issue noted above. Current efforts include:

Exploitation of cross-industry best practices

Delegating innovation to partners, or

Reacting to competitor advances

While a difficult issue that cannot be easily solved in the current industry ecosystem, there may be ways to help foster innovation and regain the creative energies that previously helped the industry to succeed in the past. At first glance, the idea of dedicating a small percentage of time (perhaps 1-2 hours per week) to non-billable networking or projects, recognized as one of the required performance objectives, could begin to change organizational mindsets. This is just one idea of many, but potentially a small commitment and investment that could yield great rewards over the long term.

This is clearly an issue in the industry and one that has no clear answer to date. There are multiple industry approaches being tested as organizations seek to regain their financial footing, global reputations, and sustainable processes. Only time will tell, but this analyst believes that the lack of institutionalized innovation has the potential to be highly debilitating, if not fatal for leading companies in the industry.